Alcatel-Lucent (ALU) Wednesday announced a three-year plan called 'The Shift Plan', aimed at repositioning the company as a specialist provider of IP Networking and Ultra-Broadband Access. The plan targets 1 billion euros in fixed cost savings and asset sales of more than 1 billion euros over 2013-2015. Alcatel also said once the plan is underway, its Finance Chief Paul Tufano would step down.
Alcatel-Lucent CEO Michel Combes said: "Today we are taking comprehensive action to position Alcatel-Lucent at the heart of the digital ecosystem, a place from which we will be able properly to capitalize on our many strengths. The Shift Plan is fundamentally an industrial plan...''
Combes, who became CEO recently, had said in April that firm was actively reviewing its businesses and operating model to design the conditions for value creation.
Media reports had indicated Tuesday that Combes would unveil measures to cut costs by about 1 billion euros, shake up management, and also direct resources away from older products with shrinking revenue.
Alcatel said today that the fixed cost savings will be concentrated on actions to reduce sales, general and administrative expenses, refocus Research & Development and improve operational efficiencies.
Alcatel also aims at 2 billion euros in debt re-profiling over 2013-2015 and future debt reduction of 2 billion euros.
The French telecom equipment maker said its new focus on the fast-growing business segments of IP Networking, cloud technologies and Ultra-Broadband Access would be delivered by a management team organized around full profit-and-loss or P&L and cash accountability.
According to the company, the "managed for cash" businesses will include key wireless, fixed access and other businesses, which will have a key role in the company's medium and long-term development. Specifically, Alcatel expects that this will create enhanced opportunities for its LTE and 'FTTx' businesses.
In the Core Networking segment, more than 15 percent increase in revenues is targeted to over 7 billion euros in 2015, from 6.1 billion euros in 2012. Targeted operating margin in 2015 is more than 12.5 percent compared to 2.4 percent in 2012.
Access and "other" segment is estimated to have over 250 million euros in targeted segment operating cash flow in 2015, in comparison with 115 million euros cash negative in 2012.
The Shift Plan will capitalize on Alcatel's recognized innovation assets, particularly its research laboratories, Bell Labs.
Further, Alcatel said that effective July 1, Philippe Guillemot is joining Alcatel-Lucent's Leadership team as Senior Executive Vice President, Operations. Philippe Guillemot has worked for a number of major, global businesses including Michelin and Valeo, where he held senior executive roles. He was also Chairman and CEO of Areva T&D.
Additionally, Alcatel said its management structure will be reorganized into four main business lines: IP Routing & Transport, IP Platforms, Wireless and Fixed Networks. These businesses will be supported by group-wide functions focused on Operations, Sales and Strategy & Innovation.
ALU fell around 2 percent on Tuesday to close at 1.41 euros.
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